Knowing the market direction

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Knowing the market direction

Post  ilearn2t on Tue Aug 07, 2012 8:30 am

Hello Everyone

Finding the right direction for each currency pair can be a good start to becoming a successful trader. You can identify trends on different chart windows on your platform by using the default or custom build indicators supplied by your brokers MT4 platform, indicators like the Simple Moving Averages (SMAs). The SMA is the average of prices over a specific time period; the oldest price is removed from the average as the newest one is added. By exploiting the variable time period you can construct trend lines that can possibly reveal the market direction each currency pair take.

A good part of your education would be to find a method that might help predict the long term trend by placing a 13 period SMA onto a 4H or upward time frame chart for your currency pair. If current prices are above the SMA line, you are in a long-term up trend. The reverse is true if current prices are below the SMA line, then the intermediate trend direction is confirmed and may hold long enough for you to place a profitable trade.

Take a look at the image below:

Long blue line is (13)
Long red line is (25)
Long white line is (50)



If you had a placed a buy order once the uptrend moved above the lines and or placed a sell order once it fell below the lines you'll notice the (13) gives you a better success rate.

To test this, simply drag the "Moving Average" indicator on to you chart window and try the 4H upward for long trend trading.

Trends can change quickly so please use your own money management or place StopLosses if not sure about MM, and only try on "demo" account until you find the best strategy for yourself.

Good luck
ilearn2t
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